Union sues Trump administration for halting student loan repayment plans

By Nate Raymond

A major U.S. teachers union has filed a lawsuit against the Department of Education accusing Republican President Donald Trump's administration of unlawfully shutting down access to income-driven repayment plans used by millions of student loan borrowers.

The American Federation of Teachers in a lawsuit filed in federal court in Washington late Monday took aim at the Education Department's decision last month to halt borrowers’ ability to enroll in the affordable repayment plans.

The department made the change after a federal appeals court ruled that Democratic President Joe Biden's administration lacked authority to pursue a student debt relief program designed to lower monthly payments for millions of borrowers and speed up loan forgiveness for some.

The court's decision, issued after Biden left office, had set back his administration's efforts to address what his White House described as a broken student debt system that can financially burden Americans seeking higher education.

The Biden-era Saving on a Valuable Education (SAVE) Plan provided more generous terms than past income-based repayment plans, with monthly payments dropping for some borrowers to as low as $0. It also provided debt forgiveness for some smaller loans in as few as 10 years.

But the February 18 decision by the St. Louis-based 8th U.S. Circuit Court of Appeals blocked the Education Department from implementing the SAVE Plan. The Education Department said the decision also blocked parts of prior repayment plans.

The ruling, in a lawsuit by a group of Republican-led states, was welcomed by the Trump administration, which called Biden's plan a "taxpayer-funded bailout" for student borrowers. Trump has called for dismantling the Education Department.

In the days that followed the 8th Circuit's decision, the Education Department directed student loan servicers to stop accepting and processing income-driven repayment applications and removed the application form from the department's website.

AFT, in its lawsuit, argued that the Education Department did so even though the 8th Circuit's decision did not bar the department from offering several other types of income-driven repayment plans that were not the subject of the litigation.

AFT President Randi Weingarten in a statement said the department was "effectively freezing the nation’s student loan system."

An Education Department spokesperson said it was working to ensure the programs conform with the 8th Circuit's ruling "and anticipates the revised form allowing borrowers to change repayment plans to be available as soon as next week."